alt-10q_20200930.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 001-32587

 

ALTIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

20-2726770

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

910 Clopper Road Suite 201S, Gaithersburg, Maryland

 

20878

(Address of Principal Executive Offices)

 

(Zip Code)

 

(240) 654-1450

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

ALT

The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  

As of November 6, 2020 there were 33,071,020 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

 

 

 


 

 

 

ALTIMMUNE, INC.

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

1

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019

 

1

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (unaudited)

 

2

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)

 

3

 

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)

 

5

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

6

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

20

 

 

 

 

Item 4.

Controls and Procedures

 

20

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

21

 

 

 

 

Item 1A.

Risk Factors

 

21

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

22

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

22

 

 

 

 

Item 4.

Mine Safety Disclosures

 

22

 

 

 

 

Item 5.

Other Information

 

22

 

 

 

 

Item 6.

Exhibits

 

23

 

 

 

 

 

Signatures

 

24

 

 

 

 

 

 

 


 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

143,495,266

 

 

$

8,962,686

 

Restricted cash

 

 

34,174

 

 

 

34,174

 

Total cash, cash equivalents and restricted cash

 

 

143,529,440

 

 

 

8,996,860

 

Short-term investments

 

 

63,282,716

 

 

 

28,277,386

 

Accounts receivable

 

 

3,816,489

 

 

 

1,021,179

 

Tax refund receivable

 

 

6,193,855

 

 

 

629,096

 

Prepaid expenses and other current assets

 

 

1,309,044

 

 

 

470,228

 

Total current assets

 

 

218,131,544

 

 

 

39,394,749

 

Property and equipment, net

 

 

1,041,920

 

 

 

1,104,208

 

Right of use asset

 

 

939,855

 

 

 

698,321

 

Intangible assets, net

 

 

12,794,806

 

 

 

12,732,195

 

Other assets

 

 

87,195

 

 

 

128,547

 

Total assets

 

$

232,995,320

 

 

$

54,058,020

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

874,885

 

 

$

18,232

 

Accrued expenses and other current liabilities

 

 

5,418,831

 

 

 

3,904,767

 

Total current liabilities

 

 

6,293,716

 

 

 

3,922,999

 

Contingent consideration

 

 

25,070,000

 

 

 

2,750,000

 

Other long-term liabilities

 

 

1,925,769

 

 

 

1,864,875

 

Total liabilities

 

 

33,289,485

 

 

 

8,537,874

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized;

   33,073,035 and 15,312,381 shares issued; 33,073,035 and 15,312,167

   shares outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

3,289

 

 

 

1,508

 

Additional paid-in capital

 

 

380,543,640

 

 

 

187,914,916

 

Accumulated deficit

 

 

(175,798,822

)

 

 

(137,376,122

)

Accumulated other comprehensive loss, net

 

 

(5,042,272

)

 

 

(5,020,156

)

Total stockholders’ equity

 

 

199,705,835

 

 

 

45,520,146

 

Total liabilities and stockholders’ equity

 

$

232,995,320

 

 

$

54,058,020

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

 

 

 

1


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

 

 

 

For the Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,937,991

 

 

$

643,978

 

 

$

5,872,321

 

 

$

5,225,600

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,041,975

 

 

 

8,729,697

 

 

 

40,823,756

 

 

 

14,892,464

 

General and administrative

 

 

4,220,238

 

 

 

2,187,661

 

 

 

9,097,511

 

 

 

6,485,960

 

Impairment charges

 

 

 

 

 

1,000,000

 

 

 

 

 

 

1,000,000

 

Total operating expenses

 

 

21,262,213

 

 

 

11,917,358

 

 

 

49,921,267

 

 

 

22,378,424

 

Loss from operations

 

 

(18,324,222

)

 

 

(11,273,380

)

 

 

(44,048,946

)

 

 

(17,152,824

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair value of warrant liability

 

 

 

 

 

76,000

 

 

 

 

 

 

30,000

 

Interest expense

 

 

(2,275

)

 

 

(756

)

 

 

(7,468

)

 

 

(2,244

)

Interest income

 

 

45,127

 

 

 

224,058

 

 

 

278,154

 

 

 

649,268

 

Other income (expense), net

 

 

29,218

 

 

 

(23,734

)

 

 

48,882

 

 

 

(6,206

)

Total other income, net

 

 

72,070

 

 

 

275,568

 

 

 

319,568

 

 

 

670,818

 

Net loss before income tax benefit

 

 

(18,252,152

)

 

 

(10,997,812

)

 

 

(43,729,378

)

 

 

(16,482,006

)

Income tax benefit

 

 

482,017

 

 

 

58,500

 

 

 

5,306,678

 

 

 

58,500

 

Net loss

 

 

(17,770,135

)

 

 

(10,939,312

)

 

 

(38,422,700

)

 

 

(16,423,506

)

Other comprehensive loss – unrealized (loss) gain on investments

 

 

(10,569

)

 

 

18,953

 

 

 

(22,116

)

 

 

18,953

 

Comprehensive loss

 

$

(17,780,704

)

 

$

(10,920,359

)

 

$

(38,444,816

)

 

$

(16,404,553

)

Net loss

 

$

(17,770,135

)

 

$

(10,939,312

)

 

$

(38,422,700

)

 

$

(16,423,506

)

Deemed dividends

 

 

 

 

 

 

 

 

 

 

 

(452,925

)

Net loss attributed to common stockholders

 

$

(17,770,135

)

 

$

(10,939,312

)

 

$

(38,422,700

)

 

$

(16,876,431

)

Net loss per share attributed to common stockholders, basic and diluted

 

$

(0.54

)

 

$

(0.74

)

 

$

(1.74

)

 

$

(1.35

)

Weighted-average common shares outstanding, basic and diluted

 

 

33,056,971

 

 

 

14,768,931

 

 

 

22,058,424

 

 

 

12,481,494

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

2


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2019

 

 

15,312,167

 

 

$

1,508

 

 

$

187,914,916

 

 

$

(137,376,122

)

 

$

(5,020,156

)

 

$

45,520,146

 

Stock-based compensation

 

 

 

 

 

 

 

 

214,921

 

 

 

 

 

 

 

 

 

214,921

 

Vesting of restricted stock awards including withholding, net

 

 

(5,974

)

 

 

1

 

 

 

(17,080

)

 

 

 

 

 

 

 

 

(17,079

)

Issuance of common stock from Employee Stock Purchase Plan

 

 

38,809

 

 

 

3

 

 

 

56,736

 

 

 

 

 

 

 

 

 

56,739

 

Issuance of common stock upon exercise of warrants

 

 

14,500

 

 

 

2

 

 

 

39,972

 

 

 

 

 

 

 

 

 

39,974

 

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,435

)

 

 

(32,435

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,885,649

)

 

 

 

 

 

(3,885,649

)

Balance at March 31, 2020

 

 

15,359,502

 

 

 

1,514

 

 

 

188,209,465

 

 

 

(141,261,771

)

 

 

(5,052,591

)

 

 

41,896,617

 

Stock-based compensation

 

 

 

 

 

 

 

 

330,510

 

 

 

 

 

 

 

 

 

330,510

 

Issuance of common stock from exercise of stock options

 

 

13,935

 

 

 

1

 

 

 

36,174

 

 

 

 

 

 

 

 

 

36,175

 

Vesting of restricted stock awards including withholding, net

 

 

(5,974

)

 

 

1

 

 

 

(46,390

)

 

 

 

 

 

 

 

 

(46,389

)

Issuance of common stock in at the market offering, net

 

 

2,965,144

 

 

 

297

 

 

 

22,780,432

 

 

 

 

 

 

 

 

 

22,780,729

 

Issuance of common stock upon exercise of warrants

 

 

8,221,279

 

 

 

822

 

 

 

31,269,341

 

 

 

 

 

 

 

 

 

31,270,163

 

Unrealized gain on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,888

 

 

 

20,888

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,766,916

)

 

 

 

 

 

(16,766,916

)

Balance at June 30, 2020

 

 

26,553,886

 

 

 

2,635

 

 

 

242,579,532

 

 

 

(158,028,687

)

 

 

(5,031,703

)

 

 

79,521,777

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,320,089

 

 

 

 

 

 

 

 

 

1,320,089

 

Issuance of common stock from exercise of stock options

 

 

32,189

 

 

 

3

 

 

 

90,267

 

 

 

 

 

 

 

 

 

90,270

 

Vesting of restricted stock awards including withholding, net

 

 

103,551

 

 

 

13

 

 

 

(114,585

)

 

 

 

 

 

 

 

 

(114,572

)

Issuance of common stock from Employee Stock Purchase Plan

 

 

53,852

 

 

 

5

 

 

 

78,727

 

 

 

 

 

 

 

 

 

78,732

 

Issuance of common stock and pre-funded warrants in public offering, net

 

 

4,119,564

 

 

 

412

 

 

 

124,027,403

 

 

 

 

 

 

 

 

 

124,027,815

 

Issuance of common stock in at the market offering, net

 

 

247,865

 

 

 

25

 

 

 

2,834,082

 

 

 

 

 

 

 

 

 

2,834,107

 

Issuance of common stock upon exercise of warrants

 

 

1,962,128

 

 

 

196

 

 

 

9,728,125

 

 

 

 

 

 

 

 

 

9,728,321

 

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,569

)

 

 

(10,569

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(17,770,135

)

 

 

 

 

 

(17,770,135

)

Balance at September 30, 2020

 

 

33,073,035

 

 

$

3,289

 

 

$

380,543,640

 

 

$

(175,798,822

)

 

$

(5,042,272

)

 

$

199,705,835

 

3


 

 

 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2018

 

 

9,078,238

 

 

$

876

 

 

$

170,207,844

 

 

$

(116,855,991

)

 

$

(5,040,163

)

 

$

48,312,566

 

Stock-based compensation

 

 

 

 

 

 

 

 

407,714

 

 

 

 

 

 

 

 

 

407,714

 

Vesting of restricted stock awards including withholding, net

 

 

71

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Issuance of common stock in registered direct offering, net

 

 

4,361,370

 

 

 

436

 

 

 

12,668,348

 

 

 

 

 

 

 

 

 

12,668,784

 

Issuance of common stock upon exercise of warrants

 

 

11,000

 

 

 

1

 

 

 

30,323

 

 

 

 

 

 

 

 

 

30,324

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,097,306

)

 

 

 

 

 

(2,097,306

)

Balance at March 31, 2019

 

 

13,450,679

 

 

 

1,313

 

 

 

183,314,257

 

 

 

(118,953,297

)

 

 

(5,040,163

)

 

 

59,322,110

 

Stock-based compensation

 

 

 

 

 

 

 

 

289,772

 

 

 

 

 

 

 

 

 

289,772

 

Vesting of restricted stock awards including withholding, net

 

 

71

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,386,888

)

 

 

 

 

 

(3,386,888

)

Balance at June 30, 2019

 

 

13,450,750

 

 

 

1,313

 

 

 

183,604,057

 

 

 

(122,340,185

)

 

 

(5,040,163

)

 

 

56,225,022

 

Stock-based compensation

 

 

 

 

 

 

 

 

287,774

 

 

 

 

 

 

 

 

 

287,774

 

Vesting of restricted stock awards including withholding, net

 

 

72

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Issuance of common stock for acquired in-process research and development

 

 

1,887,250

 

 

 

189

 

 

 

3,791,296

 

 

 

 

 

 

 

 

 

3,791,485

 

Unrealized gain on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,953

 

 

 

18,953

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,939,312

)

 

 

 

 

 

(10,939,312

)

Balance at September 30, 2019

 

 

15,338,072

 

 

$

1,502

 

 

$

187,683,155

 

 

$

(133,279,497

)

 

$

(5,021,210

)

 

$

49,383,950

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

4


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(38,422,700

)

 

$

(16,423,506

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Non-cash consideration for acquired in-process research and development

 

 

 

 

 

6,541,485

 

Change in fair value of contingent consideration liability

 

 

22,320,000

 

 

 

 

Impairment charge

 

 

 

 

 

1,000,000

 

Stock-based compensation expense

 

 

1,865,520

 

 

 

985,260

 

Depreciation

 

 

182,650

 

 

 

181,314

 

Amortization

 

 

36,282

 

 

 

135,664

 

Unrealized gains on foreign currency exchange

 

 

(44,323

)

 

 

(3,310

)

Changes in fair value of warrant liability

 

 

 

 

 

(30,000

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,815,343

)

 

 

2,449,447

 

Prepaid expenses and other current assets

 

 

(636,943

)

 

 

179,298

 

Accounts payable

 

 

856,653

 

 

 

(322,976

)

Accrued expenses and other liabilities

 

 

1,199,708

 

 

 

(2,274,497

)

Tax refund receivable

 

 

(5,564,759

)

 

 

40,376

 

Deferred taxes

 

 

 

 

 

(58,500

)

Net cash used in operating activities

 

 

(21,023,255

)

 

 

(7,599,945

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sales and maturities of short-term investments

 

 

39,385,689

 

 

 

 

Purchases of short-term investments

 

 

(74,413,135

)

 

 

(28,207,073

)

Purchase of property and equipment

 

 

(100,329

)

 

 

(1,227

)

Cash paid for internally developed patents

 

 

(98,893

)

 

 

(25,396

)

Net cash used in investing activities

 

 

(35,226,668

)

 

 

(28,233,696

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Cash paid in conjunction with warrant exchange

 

 

 

 

 

(25,000

)

Payments of deferred offering costs

 

 

(160,522

)

 

 

 

Proceeds from exercises of warrants

 

 

41,038,458

 

 

 

30,324

 

Proceeds from issuance of common stock in at the market offering, net

 

 

25,614,836

 

 

 

 

Proceeds from issuance of common stock and pre-funded warrants in public offering, net

 

 

124,027,815

 

 

 

 

Proceeds from issuance of common stock in registered direct offering, net

 

 

 

 

 

12,668,784

 

Proceeds from issuance of notes payable

 

 

632,000

 

 

 

 

Payments of notes payable

 

 

(632,000

)

 

 

(186,940

)

Proceeds from issuance of common stock from Employee Stock Purchase Plan

 

 

135,471

 

 

 

 

Proceeds from exercises of stock options

 

 

126,445

 

 

 

 

Net cash provided by financing activities

 

 

190,782,503

 

 

 

12,487,168

 

Net increase and decrease in cash and cash equivalents and restricted cash

 

 

134,532,580

 

 

 

(23,346,473

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

8,996,860

 

 

 

34,353,129

 

Cash, cash equivalents and restricted cash at end of period

 

$

143,529,440

 

 

$

11,006,656

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,791

 

 

$

 

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Common stock issued for acquired in-process research and development

 

$

 

 

$

3,791,485

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

5


 

ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Altimmune, Inc., headquartered in Gaithersburg, Maryland, together with its subsidiaries (collectively, the “Company” or “Altimmune”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.

The Company is focused on developing intranasal vaccines, immune modulating therapies and treatments for liver disease. The Company’s diverse pipeline includes proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield) and influenza (NasoVAX); an intranasal immune modulating therapeutic for COVID-19 (T-COVID); and next generation peptide therapeutics for NASH (ALT-801) and chronic hepatitis B (HepTcell). Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of common and preferred stock, long-term debt, and proceeds from research grants and government contracts. The Company has not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019 included in the annual report on Form 10-K which was filed with the SEC on March 27, 2020. In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2020 or any future years or periods.

The unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

During the nine months ended September 30, 2020, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual report on Form 10-K for the year ended December 31, 2019 as filed with the SEC, except for the recently adopted accounting standard for investments.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change. The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2020. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods.

Recently Issued Accounting Pronouncements - Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”). ASU No. 2018-13 was issued to modify and enhance the disclosure requirements for fair value measurements and eliminates certain disclosure requirements, such as the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy. This ASU adds new disclosure requirements for Level 3 measurements and is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2020 which resulted in expanded disclosures in Note 3 regarding the Company’s recurring Level 3 fair value measurements.    

3. Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2020 consisted of the following:

6


 

 

 

 

Fair Value Measurement at September 30, 2020

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents - money market funds

 

$

47,191,204

 

 

$

47,191,204

 

 

$

 

 

$

 

Short-term investments

 

 

63,282,716

 

 

 

 

 

 

63,282,716

 

 

 

 

Contingent consideration liability (see Note 8)

 

 

25,070,000

 

 

 

 

 

 

 

 

 

25,070,000

 

Warrant liability

 

 

10,000

 

 

 

 

 

 

 

 

 

10,000

 

 

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019 consisted of the following: